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MBAs Gone Wild

Nonprofits must reign in pro bono MBAs

 

I have an MBA. And like a lot of other people with MBAs, I think I’m pretty smart. Show me a nonprofit facing a major strategic challenge and I’ll bet you dollars to donuts I’ll come up with a business solution that will deliver results.

What’s that? Your after-school program needs a plan to ensure its future success? I’ve got an idea for self-sustaining income: Why not start a little factory where the kids can spend their after-school hours making fashionable shoes? (And don’t worry about paying them much; they’re getting valuable work experience!)

OK, I’m really not like that. But it has taken years in the nonprofit sector to appreciate the challenge of applying business best practices to that sector. In fact, like the proverbial bull in a china shop, MBAs like me can, without appropriate understanding of nonprofits, actually wreak havoc when let loose in the often alien world of nonprofit strategic planning. Here’s how it usually works:

Step 1: MBAs arrive at the nonprofit with great fanfare (preferably to the musical accompaniment of Celine Dion’s “I’m Your Angel”).

Step 2: We offer advice and recommendations (based largely on forprofit business models that may or may not work in a nonprofit setting).

Step 3: We accept warm thanks for our work (and hear a host of reasons why our proposals won’t fly).

Step 4: We return to our comfortable for-profit worlds not knowing whether our work will have any real impact; still, we feel warm and tingly about having made a contribution to the greater good.

Obviously, this is a gross generalization. Still, nonprofits often deploy pro bono MBAs unsuccessfully.

It’s also true, however, that MBAs can add real value, and that the time for pro bono is now. The strategic challenges facing nonprofits are ever more complicated, nonprofits are beginning to embrace better planning as the route to stronger results, and most nonprofits lack the resources to plan effectively.

The challenge, of course, is figuring out when pro bono works best to support effective strategic planning, when it fails, and how to scale up the right kinds of pro bono support.

When Pro Bono Doesn’t Work

Let’s divide the strategic planning process into three stages: gathering relevant information and conducting appropriate analysis (so that the organization has a firm grip on the main issues and options it faces); weighing options, consulting with stakeholders to get their buy-in (particularly in the nonprofit sector), and making decisions; and finally, implementing the plan and putting a process in place to monitor results and adjust strategy as needed.

Although a nonprofit might sign up for pro bono help during all three phases, sometimes one party or the other should just say no to blanket help. In particular, pro bono MBAs should avoid that middle piece of the process, where stakeholders are engaged and decisions are made.

Consider the somewhat fictional example of a community health clinic in the San Francisco Bay Area that was launching a strategic planning process. The organization was understandably excited to get pro bono support from a team of highly experienced strategy consultants and MBAs eager to dig deep into the core of the planning process. The team, in turn, couldn’t wait to make profound observations and accept kudos for their highly beneficial insights.

What really happened: The MBA team led a number of blue-sky discussions designed to get the clinic’s leaders to think big about expanding their services citywide, yet the clinic simply wanted to better meet new and emerging health challenges in the small neighborhood they serve. When the clinic director suggested that line staff be highly engaged in building buy-in for any new strategic direction, the MBA team chafed at that “inefficient” process. “But you’re the CEO,” they chorused with exasperation. At which point they urged her to go out and buy a copy of The Welch Way: 24 Lessons From the World’s Greatest CEO.

The nonprofit leaders were disappointed by the team members’ efforts. But rather than tell them this, the leaders continued to praise them, hoping to turn these wealthy MBAs into major donors. Meanwhile, the MBA team evaluated the organization’s ability to execute the proposed strategy, thereby offending many staff members and undercutting the executive director’s power to implement the proposed changes.

As our example shows, the core of the nonprofit planning process is exactly the wrong place to let pro bono, MBA-wielding consultants loose. More often than not, business professionals taking on these assignments lack the understanding of the environmental context facing nonprofits, their hardwired mission focus, and the differences between nonprofit and for-profit decision making.

When Pro Bono Does Work

MBAs do have the skills and understanding to provide critical pieces of nonprofit strategic planning and management. Good projects for pro bono MBA consultants include collecting and analyzing external data, such as issues the nonprofit will confront in the next three years; analyzing options for the organization itself to consider and debate; benchmarking against great nonprofit and for-profit organizations, particularly those willing to share critical best practices; and creating summary reports that enable the nonprofit’s leaders and board to track implementation successes easily and sustainably.

Let’s consider another somewhat fictionalized pro bono consulting example: the aforementioned afterschool program.

An MBA team partnered with the executive director and a nonprofit facilitator who had solid experience helping nonprofits make strategic planning decisions.

Launching into their work, team members forecast significant changes in federal policies that would open up major new revenue opportunities and program possibilities. They outlined the primary capabilities that would enable an organization to use these opportunities – an ability to market directly to parents, develop a specialized curriculum, and apply for and report on these sorts of government grants – though they did not determine whether the organization had those capabilities or how difficult they would be to add.

In addition, team members benchmarked the fundraising operations of an after-school program in Seattle that served a similar population. This effort enabled the team to show persuasively that the other nonprofit was raising more money more efficiently.

Armed with the information produced by the pro bono consultants, the nonprofit’s director then led his board to plot a course to success.

Scaling Up the Right Kind of Support

By now, you’re probably wondering how I can so confidently name the tasks corporate professionals working pro bono should choose. I assure you, my MBA (I have one, remember?) did not give me the knowledge I bring to this subject. I’ve just done a fair amount of data gathering.

In 2007, for instance, the Taproot, with support from Deloitte, embarked on a study to assess how to bring high-quality strategic planning support to nonprofits at a scale that will enhance the social sector’s overall impact and performance. We found the following:

  • Conservatively, there are more than 2 million professionals in the United States who have the skills needed to help nonprofits with their strategic planning.
  • Of the more than 200,000 small to midsized nonprofits in the United States ($500,000 to $20 million in revenues), only about half have strategic plans. The majority of those that do often make critical decisions without access to important data and analysis.
  • Nonprofits are eager to assign pro bono consultants to those elements of the strategic planning process that minimize the risks associated with that cross-cultural partnership.
  • Effective models for using pro bono professionals do exist (Taproot Foundation’s model is one).

No doubt, pro bono strategic services can make a huge contribution. But realizing this potential, and engaging even a small portion of business professionals in pro bono strategic planning assignments, will take real dedication by players in both the nonprofit and for-profit sectors. Foundations, for instance, must support the infrastructure needed for successful delivery of these services. Corporations should develop rigorous pro bono programs that attract large numbers of employees. And business schools should instill the assumption of pro bono in their graduates as aggressively as law schools do.

If we do this right, we will leave the social sector stronger and more able to deliver lasting benefits to our communities and society at large. MBAs might be miscast as superheroes – “The MBAs are here to save the day!” – but we can certainly make an important contribution.


JAMES W. SHEPARD JR. joined the Taproot Foundation four years ago and is now the national vice president of programs and operations. He received his MBA from Northwestern University’s Kellogg Graduate School of Management.

 
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COMMENTS

  • BY Sabrina Qutb

    ON March 13, 2008 12:35 PM

    Thank you for this insightful article.  I do think that Mr. Shephard offers some great tips to MBA’s who hope to volunteer for nonprofits. 

    That said, I can’t resist challenging the basic premise of the article—that the nonprofit sector is in desperate need of outside expertise.  Many nonprofits have managed to leverage limited resources very creatively to maximize their positive social impact.  On the flip side, many (not all) for-profit businesses with resources “out the wazoo” seem to have trouble meeting basic profit goals without doing tremendous damage to communities, the environment and the economy. 

    Here’s a suggestions to those large companies and business schools who may be thinking of how to increase the pro bono work of their MBAs to help out nonprofits. Why not take all that wonderful expertise and take a look at the internal business practices of the for-profit sector?  How can the MBAs on your staff help you figure out a way to pay your low-wage workers more? Or how to reduce your environmental impact? Or how to prevent, rather than cause a large-scale mortgage crisis?  That would lighten the work load of the nonprofit sector tremendously!

  • Chris G.'s avatar

    BY Chris G.

    ON March 29, 2008 10:03 AM

    What a great article!  Genuinely amusing & insightful—thank you, James.

    Sabrina, in her earlier comment, raises an excellent question/suggestion.  Personally, I’ve found that the MBAs (and others) who do pro bono work for nonprofits have much in common with their colleagues who focus on Corporate Social Responsibility.  In fact, I know a few people who work in CSR as their “day job” who then volunteer at nonprofits in their free time.  I agree that CSR is important, but these two areas are growing in tandem, not in competition.

    Further, while I can certainly understand why nonprofits that have had a negative experience with consultants would be reluctant to engage pro bono professionals, to not even consider them is like ignoring a potential source for funding.  Professionals who provide their skills to nonprofits for free are making a contribution to that nonprofit.  Would you turn down a contribution for $10,000?  Then why turn down $10,000 worth of services?  Sure, it’s not an “unrestricted gift,” but if you got a $10,000 gift, would you allocate it to improved decision-making & planning, or would you fear that doing so would inflate your “overhead” and instead devote it to programs & urgent needs?  Pro bono professionals are worth more than the services rendered—they give a nonprofit the ability to think strategically without worrying that they will short-change present needs.

    Pro bono professionals are a gift, and the intelligent nonprofit will leverage them as effectively as they leverage donated assets.  I think James has provided some excellent suggestions for how best to do so.

  • BY Gary Steuer

    ON April 17, 2008 12:48 PM

    Excellent article! It is clear that while MBA’s have much to offer the nonprofit sector, the application of their skills to the nonprofit sector without adequate knowledge of the industry or issues they will be dealing with can spell disappointment or disaster.  Another model that really works is Business Volunteers for the Arts(r). Launched in 1975 in New York City, and now operated in about a dozen communities around the country, this program recruits business executives who have a specific interest in using their business skills to help arts organizations. After an interview process, they go through an orientation program designed to give then the grounding they need not just in nonprofit issues, but also arts issues, and the specific challenges/issues in the community they are working in. A “match” is then made based on their art form interests AND their business expertise. Throughout the process a staff-person knowledgeable in BOTH business and the arts serves as the liaison for the project. 

    I think a key to the program’s success is that (unlike other excellent programs such as Taproot) it is specific to the arts, which allows the business volunteers to develop a real understanding of a segment of the nonprofit sector they are passionately interested in. Nationally the program is now operated by Americans for the Arts (http://www.AmericansForTheArts.org) and locally it is operated by local partners, often an Arts & Business Council chapter. (http://www.bvausa.org is the url that takes you directly to the national web site)

  • Rich Baker's avatar

    BY Rich Baker

    ON April 17, 2008 02:58 PM

    Thanks for the great article.  I have to chime in, though, second the comment by Sabrina and add a bit more of my own thoughts.

    Sabrina makes a great point that nonprofits have done pretty well without outside help.  However, there is a bullet later in the article which points out that there are around 100,000 small and mid-size nonprofits working without any strategic plan.  That’s a very bad situation to be in and I would not be surprised to find that these organizations are not being run efficiently and are not being effective in fulfilling their mission.  This is a deficiency that the board of those nonprofits should not be tolerating.

    I would have to propose, though, that the solution may not be to leverage a pro bono MBA in some areas of the planning process and polite ask them to step back for others.  Rather, wouldn’t it make sense to develop leaders which can manage all parts of the planning process?  Wouldn’t it be even more effective to have an MBA who can guide the organization through all three of the stages you describe because they truly understand the organization?  Leadership development is a major issue for all organizations, regardless of whether they take a profit or not.  Rather than depend on the generosity of for-profit MBAs who, according to your article, can only provide limited assistance anyway, it is vital that nonprofits work hard to realize the leadership potential within their own staff.  This means creating leadership development programs and mentoring programs and providing educational assistance for those seeking MBAs. 

    The disclaimer here is that I am completing my MBA in a few weeks and have been working in nonprofits for over seven years.  So, I am pre-disposed to think that more nonprofits need people exactly like me.  But, I’m not the only one to think this.  There is much discussion in the field about leadership development.  As Rosetta Thurman said in an SSIR blog in December (link below), “At least three out of four executive directors plan to leave their jobs within the next five years and about half of current younger professionals plan to leave the sector altogether.”

    I don’t think pro bono work is going to solve that problem.  Still, it is an extremely valuable resource and I thank you again for the tips about proper usage of that resource.

  • BY Terri Barreiro

    ON April 17, 2008 03:53 PM

    I too have an MBA and have worked primarily in the nonprofit sector for over 30 years.  I have had some positive and some negative experiences with pro-bono MBA’s from the corporate world or from graduate programs.  Most of the positives come when the volunteer first takes the time to understand the organization and the industry within which the nonprofit functions.  That often is best done by being a volunteer in the program in some way.  The negatives are when the MBA volunteer comes in with an attitude that assumes nonprofits are incompetently run and arrives with a formula approach that sets limits on what can be included in the search for data and excludes people who should be involved in the discussions and decisions. 

    This is a good article that tells both sides of the story.  I think Gary Steuer’s comment calling for a quality orientation is critical to make the offer of time of more value to a nonprofit.  Thanks for starting the dialogue.

  • Sachi Itagaki's avatar

    BY Sachi Itagaki

    ON April 17, 2008 11:57 PM

    As both a non-MBA consultant (environmental engineering for almost 20 years including 4 years on the Company board of directors) and the board president of a health care focussed non-profit (approx $500k/yr budget) for the last 10 years, my observation is that any good consultant will provide information that assists a client to make better decisions. Good consultants also acknowledge what they DON’T know and assist clients to find the best resources to assist them.  It is often with time (often years) and effort that an “outsider” can obtain enough information to provide an organization with those kinds of insights.  It’s important to recognize that most non-profits are so mired in their everyday operations, that it is difficult to see past that to bigger issues and opportunities.

    With a friend, also on the board, who has worked in management consulting, we have developed a de facto board committee to coach and advise our ED on both operational topics such as personnel issues (often sticky for any organization), finance, as well as strategy and focus. 

    I’ve worked with our ED in hiring 3 different consultants to help our organization with strategic planning.  The first effort was led by a non-profit assistance group with several former EDs- it was frankly, not very visionary but at least got us a written plan at a relatively low price.  The second was by a pro-bono “visionary” but didn’t include the preparation of a written plan.  The third effort to update the plan was led by a paid consultant who specialized in strategic planning for for profit businesses- while not perfect, the third effort has at least provided our ED with a road map and provide her an opportunity to think more strategically as well as resulting in a written document.

    That said, one of the biggest challenges that non-profits have is finding effective board members.  I encourage those of you with MBAs to invest your time in finding a non-profit that is a fit for your interest,  with a management team (ED, finance, etc.) with which you can develop a strong relationship and high level of trust, as well as fellow board members that you can work well with.  Also, recognize that non-profit boards come in many flavors - for a large organization, they can be largely advisory and/or names for fund raising; a very small organization might find you in a highly operational role.  Make sure you understand the type of board that it is before making a commitment.  There’s nothing more demoralizing to a non-profit than to find what looks like a great board member, to later find that they’re not a good fit because of unclear expectations on either part. 

    In the capacity of a board member, I think that an MBA could be a highly valued member of a team that can assist a non-profit to develop and implement it’s goals.  Acting as a board member may be your most effective use of pro-bono time.  My observation is that management and leadership development can be the weakest link in any non-profit.

  • BY Linda Mihalik

    ON April 18, 2008 06:25 AM

    Thank you, Mr. Shepard. This is the first time I’ve read anything so brave as to say that MBA’s are not always the answer for nonprofits.

    I remember going on a job interview after I earned a Master of Nonprofit Organizations and over 15 years in nonprofit management. I explained my degree and experience, and what I could bring to the organization. Four weeks later I hadn’t heard back, so I called.  The interviewer proudly told me that they had hired someone with an MBA who had no nonprofit experience!

    To take Mr. Shepard’s thinking a step further, I think that business people who sit on Boards of Directors bring the same set of issues, especially those who are new to the position. And I’ve met too many ED’s who are too timid to properly orient them.

    Of course, here we are talking to ourselves. How can we get business people to learn from Mr. Shepard?

    Again, thank you. I feel less alone in my frustration.

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